EDITORIAL: Time to snap out of the malaise

Tue, Jun 11, 2013 - Page 8

In its latest annual white paper, the American Chamber of Commerce in Taipei (AmCham) has expressed reservations about Taiwan’s investment environment, warning that the nation is being marginalized in the recent wave of international economic integration.

While it is true that this is a recurring theme in AmCham’s white papers, this year’s report singles out many impediments put in place by the government, including ineffective legislation that has relegated Taiwan to second-from-bottom of the 17 major Asian economies in terms of investment attraction for private equity funds.

According to the report, Taiwan is ahead only of Pakistan, and even trails Sri Lanka in this regard. This makes a joke of the government’s plans to develop Taiwan into a financial services center.

How different things were before. The nation’s previous “go get ‘em” approach made it an economic model for growth in developing countries. “If Japan and South Korea can do this, then why can’t Taiwan?” expresses the kind of spirit behind the approach. It was an indefatigable drive that not even the energy crisis of the 1970s, nor the 1990s Asian financial crisis, could dent, enabling Taiwan to compete not only with other Asian Tigers, but also with more developed countries.

However, in the past 10 years or so the nation seems to have lost its way, as a result of political infighting, lack of vision by its leaders, a preoccupation with entering the Chinese market and lack of international economic integration; all of which have conspired to drain the impetus to compete. Nowadays, Taiwan struggles even to finish above last among its fellow tigers.

The past few years have been tough. The public has had to deal with leaden economic growth, corporate flight, rising unemployment, falling salary levels, a drop in consumer confidence, people seeking work overseas, increasing national debt and economic stagnation. President Ma Ying-jeou (馬英九) has not only failed to deliver on his “6-3-3” campaign pledge (6 percent economic growth, less than 3 percent unemployment and per capita income of more than US$30,000 within his first term), his government’s economic stimulus packages have been flops too. Furthermore, so-called reform measures — levying a luxury tax and a capital gains tax on securities transactions — have been toxic for the property and stock markets.

Premier Jiang Yi-huah (江宜樺) has conceded that the economy faces many pressing problems and the government has announced a five-year, NT$3.4 billion (US$113.8 million) stimulus package. However, this has largely been dismissed as less than what goes into a Jody Chiang (江蕙) concert.

The government’s efforts deserve little more than ridicule. It is no wonder that many people are now expressing concern that Taiwan is turning into a new Philippines, or that it is going the way of Greece.

The AmCham paper was produced by a single institution, and it is not an authoritative report, but the nation ignores it at its peril. When Taiwan was going through its economic miracle, the country was not satisfied with merely being ahead of other developing countries, its ambition made it aim for the top.

Now the government seems satisfied with a humble place in world rankings and it is this acceptance of Taiwan’s decline that is the most worrying aspect of all. Compare for a moment Japanese Prime Minister Shinzo Abe, who is dragging the Japanese economy back to its feet with his ambitious “Abenomics.”

When South Korea’s economic indicators gave off warnings, the government immediately ordered a radical devaluation of the won and implemented measures to bring down interest rates and benefit exports. Ma, on the other hand, is behaving like a rabbit caught in headlights.